Title
ECONOMIC COMPLEMENTATION AGREEMENT NO. 31 CONCLUDED BETWEEN BOLIVIA AND MEXICO
Preamble
PREAMBLE
The Government of the United Mexican States and the Government of the Republic of Bolivia,
DETERMINED TO
STRENGTHEN the special ties of friendship, solidarity and cooperation between their peoples;
ACCELERATE and promote the revitalization of the American integration schemes;
STRENGTHEN the Latin American Integration Association as a center of articulation and convergence of Latin American integration schemes;
TO ACHIEVE a better balance in trade relations among its countries, taking into consideration their levels of economic development;
CONTRIBUTE to harmonious development, to the expansion of world trade and to the expansion of international cooperation;
CREATE a larger and more secure market for goods produced and services supplied in their territories; REDUCE distortions in their reciprocal trade;
ESTABLISH clear and mutually beneficial rules for their commercial exchange;
ENSURE a predictable commercial framework for the planning of productive activities and investment;
DEVELOP their respective rights and obligations under the General Agreement on Tariffs and Trade (GATT), the Treaty of Montevideo 1980, as well as other bilateral and multilateral integration and cooperation instruments;
STRENGTHEN the competitiveness of its enterprises in world markets; ENCOURAGE innovation and creativity through the protection of intellectual property rights;
CREATE new employment opportunities, improve working conditions and living standards in their respective territories;
PROTECT the fundamental rights of their workers;
UNDERTAKE all of the above in a manner consistent with the protection and conservation of the environment;
STRENGTHEN the development and enforcement of environmental laws and regulations;
PROMOTE sustainable development;
PRESERVE its capacity to safeguard the public welfare; and
ENCOURAGE the dynamic participation of the various economic agents, particularly the private sector, in efforts to deepen economic relations between the Parties and to develop and maximize the potential of their joint presence in international markets;
CONCLUDE THIS FREE TRADE AGREEMENT
In accordance with the GATT and with the character of a Partial Scope Agreement of Economic Complementation for the purposes of the Treaty of Montevideo 1980 and Resolution 2 of the Council of Ministers of Foreign Affairs of the contracting parties to that treaty.
Body
Chapter I. Initial Provisions
Article 1-01. Objectives.
1. The objectives of this Treaty, specifically developed through its principles and rules, including those of national treatment, most-favored-nation treatment and transparency, are as follows:
a) stimulate the expansion and diversification of trade between the Parties;
b) eliminate barriers to trade and facilitate the movement of goods and services between the Parties;
c) promote conditions of fair competition in trade between the Parties; substantially increase investment opportunities in the territories of the Parties;
d) adequately and effectively protect and enforce intellectual property rights in the territory of each Party;
e) to establish guidelines for further cooperation between the Parties, as well as at the regional and multilateral levels to expand and enhance the benefits of this Agreement; and
f) create effective procedures for the implementation and enforcement of this Agreement, for its joint administration and for the settlement of disputes.
2. The Parties shall interpret and apply the provisions of this Agreement in the light of the objectives set forth in paragraph 1 and in accordance with the applicable rules of international law.
Article 1-02. Relationship with other Treaties and International Agreements.
1. The Parties confirm the rights and obligations in force between them under the GATT, the Treaty of Montevideo 1980, and other treaties and agreements to which they are parties.
2. In case of incompatibility between the provisions of the treaties and agreements referred to in paragraph 1 and the provisions of this Treaty, the latter shall prevail to the extent of the incompatibility.
Article 1-03. Compliance with the Treaty.
Each Party shall ensure, in accordance with its constitutional requirements, compliance with the provisions of this Agreement in its territory at the central or federal, departmental or state, and municipal levels, except as otherwise provided in this Agreement.
Article 1-04. Succession of Treaties.
Any reference to any other treaty or international agreement shall be understood to be made in the same terms to a successor treaty or agreement to which the Parties are parties.
Chapter II. General Definitions
Article 2. Definitions of General Application.
For purposes of this Agreement, unless otherwise specified, the following definitions shall apply:
customs duty: a tax, duty or import levy and charge of any kind applied in connection with the importation of goods, including any form of surcharge or additional charge on imports, except:
(a) a charge equivalent to an internal tax imposed in accordance with Article III:2 of the GATT in respect of like goods, direct competitors or substitutes of the Party, or in respect of goods from which the imported good has been manufactured or produced in whole or in part;
(b) a countervailing duty that is applied in accordance with the laws of each Party; (c) a duty or other charge related to the importation, proportionate to the cost of the services rendered; and
(d) a premium offered or collected on imported goods, derived from any tendering system, in respect of the administration of quantitative import restrictions or tariff-rate quotas or tariff preference quotas.
good of a Party: domestic products as understood in the GATT, such goods as the Parties may agree, and includes originating goods. A good of a Party may incorporate materials from other countries;
originating good: a good that complies with the rules of origin set out in Chapter V (Rules of Origin);
Customs Valuation Code: the agreement relating to the application of Article VII of the GATT, including its interpretative notes;
Commission: the Administrative Commission established pursuant to Article 18-01 (Administrative Commission);
countervailing duty: antidumping duties and countervailing duties or countervailing duties according to the legislation of each Party;
days: calendar or calendar days;
enterprise: any legal person constituted or organized under applicable law, whether or not for profit and whether privately or governmentally owned, as well as other organizations or economic units that are constituted or, in any case, duly organized under the law, including branches, foundations, partnerships, trusts, participations, sole proprietorships, joint ventures or other associations;
State enterprise: an enterprise owned or controlled by a Party through equity participation; enterprise of a Party: an enterprise incorporated or organized under the laws of a Party;
tariff item: the breakdown of a Harmonized System tariff classification code to more than six digits; measure: any law, regulation, procedure, administrative provision or practice, among others;
national: a natural person who has the nationality of a Party under its legislation. It shall be understood that the term also extends to persons who, in accordance with the legislation of that Party, have the status of permanent residents in the territory of that Party;
Party: any State with respect to which this Agreement has entered into force; exporting Party: the Party from whose territory a good or service is exported; importing Party: the Party into whose territory a good or service is imported;
item means a tariff classification code of the Harmonized System at the four-digit level; person: a natural person or an enterprise;
person of a Party: a national or company of a Party;
Tariff Relief Program: the program established under Article 3-04 (Tariff Relief); Secretariat: the Secretariat established pursuant to Article 18-02 (Secretariat);
Harmonized System: the Harmonized Commodity Description and Coding System, including the General Classification Rules and the Explanatory Notes thereto;
subheading: a tariff classification code of the Harmonized System at the six-digit level;
territory: for each Party, as defined in the Annex to this Article.
Annex to Article 2-01. Country-specific definitions
Unless otherwise provided, for the purposes of this Agreement, the following definitions shall apply: territory:
(a) with respect to Bolivia:
(i) the departments, provinces and cantons; (ii) the territories over which it exercises administrative control;
iii) the space located on the national territory, with the extension and modalities established by international law;
(iv) any maritime zone within which Bolivia may exercise rights over the seabed and subsoil, and over the natural resources contained therein, in accordance with international law, including the United Nations Convention on the Law of the Sea; and
v) the soil and subsoil with all its natural wealth, the lake, fluvial and medicinal waters as well as the elements and physical forces susceptible of exploitation;
b) with respect to Mexico:
(i) the states of the Federation and the Federal District;
(ii) the islands, including reefs and keys in adjacent seas;
(iii) the islands of Guadalupe and Revillagigedo, located in the Pacific Ocean;
iv) the continental shelf and the submarine sockets of the islands, cays and reefs;
v) the waters of the territorial seas, to the extent and under the terms established by international law, and the internal maritime waters; vi) the space above the territory of the Republic, to the extent and under the terms established by international law, and the internal maritime waters;
vi) the space above the national territory, to the extent and under the terms established by international law itself; and
vii) any area beyond the territorial seas of Mexico within which Mexico may exercise rights over the seabed and subsoil and over the natural resources contained therein, in accordance with international law, including the United Nations Convention on the Law of the Sea, as well as with its domestic legislation.
Chapter III. National Treatment and Market Access for Goods
Section A. Scope of Application and National Treatment
Article 3-01. Scope of Application.
This Chapter applies to trade in goods between the Parties, except as otherwise provided in this Agreement.
Article 3-02. National Treatment.
1. Each Party shall accord national treatment to goods of the other Party in accordance with Article III of the GATT, including its interpretative notes. For this purpose, Article Ill of the GATT and its interpretative notes are incorporated into this Agreement and are an integral part thereof.
2. The provisions of paragraph 1 mean, with respect to a state or department, including local governments, treatment no less favorable than the most favorable treatment accorded by that state or department to any like goods, direct competitors or substitutes, as the case may be, of the Party of which they are members.
3. Paragraphs 1 and 2 do not apply to the measures set out in the Annex to Articles 3-02 and 3-08.
Section B. Customs Duties
Article 3-03. Tariff Relief.
1. Except as otherwise provided in this Agreement, no Party may increase any existing customs duty, or adopt any new customs duty, on originating goods (1).
2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods as set out in the Annex to this Article.
3. Except as otherwise provided in this Agreement, this Agreement incorporates tariff preferences previously negotiated or granted between the Parties in the framework of LAIA, as reflected in the Tariff Dismantling Schedule. As of the entry into force of this Agreement, such preferences shall cease to have effect.
4. At the request of either Party, the Parties shall hold consultations to examine the possibility of accelerating the elimination of customs duties as provided for in the Tariff Discharge Schedule.
5. Once approved by the Parties, in accordance with their applicable legal procedures, the agreement on an originating good reached between the Parties under paragraph 4 shall prevail over any customs duties or categories of relief identified under the Tariff Relief Program for that good.
Article 3-04. Restrictions on Duty Drawback on Exported Goods and Duty Deferral or Suspension Programs.
1. For the purposes of this Article, the following definitions shall apply:
customs duties: the duties that would be applicable to a good that is imported for consumption in the customs territory of a Party if the good were not exported to the territory of the other Party;
fungible goods: fungible goods as defined in Chapter V (Rules of Origin);
identical or similar goods: goods that are alike in all respects, including physical characteristics, quality and commercial prestige, as well as goods which, although not alike in all respects, have similar characteristics and composition, enabling them to perform the same functions and to be commercially interchangeable;
material: a material as defined in Chapter V (Rules of Origin);
tariff deferral or suspension programs: measures governing free or duty-free zones, temporary imports under bond, temporary imports for export, bonded warehouses, maquiladora and other export processing programs, among others.
2. No Party may refund the amount of customs duties paid, or waive, suspend or reduce the amount of customs duties owed, with respect to a good imported into its territory that is:
(a) used as a material in the production of another good subsequently exported to the territory of the other Party; or
(b) replaced by an identical or similar good used as a material in the production of another good subsequently exported to the territory of the other Party;
in an amount that exceeds the total customs duties paid or owed on that quantity of that imported good that is materially incorporated into the good exported to the territory of the other Party, or replaced by identical or similar goods materially incorporated into the good exported to the territory of the other Party, with an appropriate allowance for waste.
3. No Party may, on condition of export, refund, waive, suspend, or reduce:
(a) countervailing duties applied in accordance with the Party's legislation;
(b) premiums offered or collected on imported goods under any tendering system relating to the application of quantitative import restrictions, tariff-rate quotas, or tariff preference quotas; or
(c) customs duties paid or owed in respect of a good imported into its territory and replaced by an identical or similar good that is subsequently exported to the territory of the other Party.
4. Except as otherwise provided in this Article, as of the date and in the circumstances set out in paragraphs 7 and 8, no Party may refund the amount of customs duties paid, or waive, suspend or reduce the amount of customs duties owed, with respect to a good imported into its territory, provided that the good is:
(a) used as a material in the production of an originating good subsequently exported to the territory of the other Party; or
(b) replaced by an identical or similar good used as a material in the production of an originating good subsequently exported to the territory of the other Party.
5. Effective on the date and in the circumstances set out in paragraphs 7 and 8, where a good is imported into the territory of a Party pursuant to a tariff deferral or suspension program and any of the conditions set out in paragraph 4(a) and (b) are met, the Party from whose territory the good was exported shall:
(a) determine the amount of customs duties as if the exported good had been destined for domestic consumption; and
(b) within 60 days of the date of exportation, collect the amount of customs duties as if the exported good had been destined for domestic consumption.
6. Paragraphs 3 through 5 do not apply to:
(a) a good that, under the law of each Party, is imported under bond or guarantee to be transported and exported to the territory of the other Party;
(b) a good that is exported to the territory of a Party in the same condition in which it was imported into the territory of the Party from which it is exported. Processes such as testing, cleaning, repackaging, inspection or preservation of the good in the same condition shall not be considered as changes in the condition of the good. Where a good has been commingled with fungible goods and exported in the same condition, its origin, for the purposes of this paragraph, may be determined on the basis of the inventory methods set out in Chapter V (Rules of Origin);
(c) a good imported into the territory of a Party, which is subsequently deemed to be exported from its territory, or is used as a material in the production of another good, which is subsequently deemed to be exported to the territory of the other Party, or is replaced by an identical or similar good used as a material in the production of another good which is subsequently deemed to be exported to the territory of the other Party, by reason of:
(i) its shipment to a store free of customs duty; or (ii) shipment to stores on board vessels or as supplies for vessels or aircraft;
(c) a refund by a Party of customs duties paid on a specific good imported into its territory and subsequently exported to the territory of the other Party, where such refund is granted on the grounds that the good does not correspond to the samples or specifications of the good that was intended to be imported, or on account of the shipment of that good without the consent of the consignee; or
(d) an originating good imported into the territory of a Party that is subsequently exported to the territory of the other Party, or used as a material in the production of another good subsequently exported to the territory of the other Party, or replaced by an identical or similar good used as a material in the production of another good subsequently exported to the territory of the other Party.
7. Subject to paragraph 8, paragraphs 4 and 5 shall apply:
(a) from the time that Bolivia applies to a non-Party provisions similar to those contained in those paragraphs; or
(b) for three years, with respect to a good imported into the territory of a Party that meets the conditions in subparagraphs (a) and (b) of paragraph 4, where it is demonstrated that the refund, exemption, suspension, or reduction of customs duties simultaneously
(i) creates a significant distortion of the general tariff treatment applied by the Party granting the refund, exemption, suspension or reduction of customs duties in favor of the export of goods from the territory of that Party; and
(ii) Causes injury or threat of injury to a domestic industry producing identical, like or directly competitive goods of the other Party.
8. In no case shall paragraphs 4 and 5 apply before the eighth year of the Treaty's entry into force.
9. For purposes of paragraph 7, the existence of a significant distortion of the general tariff treatment applied by a Party granting a refund, exemption, suspension or reduction of duties in favor of the export of goods from the territory of that Party shall be presumed to exist when:
(a) the amount of duties refunded, exempted, suspended or reduced on goods imported into the territory of that Party that satisfy the conditions set out in subparagraphs (a) and (b) of paragraph (4) exceeds 5 percent of the total value of imports, during a year, of originating goods provided for in a tariff item of the Party to whose territory those originating goods are exported; or
(b) a Party refunds, exempts, suspends or reduces customs duties on goods or materials imported from the territory of a non-Party on the importation of which it maintains quantitative restrictions, and those goods or materials are subsequently exported to the other Party, used in the production of goods subsequently exported to the other Party, or replaced by identical or similar materials used in the production of goods subsequently exported to the other Party.
10. A Party that refunds, exempts, suspends or reduces customs duties shall, on request of the other Party, provide the information required to verify the existence of the conditions set out in paragraph 7, including with respect to each and every import on which it grants refunds, exemptions, suspensions or reductions of customs duties with respect to a good exported to the territory of the other Party.
11. For purposes of paragraph 7, the following definitions shall apply:
(a) threat of injury means clearly imminent injury, based on the facts and not merely on allegation, conjecture or remote possibility;
(b) "injury" means a significant impairment of a domestic industry; and
(c) domestic industry: the producer or producers of identical or similar goods or direct competitors operating within the territory of a Party.
12. Each Party shall establish clear and strict procedures for the application of paragraphs 4 and 5, in accordance with the following:
(a) the Party that decides to initiate an investigation to implement paragraphs 4 and 5 shall publish the initiation of the investigation in the appropriate official organs of dissemination and shall notify the exporting Party in writing on the day following publication;
(b) for purposes of determining significant distortion and injury or threat of injury under paragraph 7(b)(i) and (ii), the competent authorities shall evaluate all factors of an objective and quantifiable nature;
(c) in determining the application of paragraphs 4 and 5, a direct causal link shall also be demonstrated between the reimbursement, exemption, suspension or reduction of customs duties, and the distortion and injury or threat of injury to the domestic industry;
(d) if as a result of this investigation the competent authority determines, on the basis of objective evidence, that the conditions set forth in this Article are met, the importing Party may initiate consultations with the other Party;
(e) the consultation procedure shall not oblige the Parties to disclose information that has been provided on a confidential basis, the disclosure of which would impede compliance with the laws of the Party governing the matter or would prejudice commercial interests;
(f) the period of prior consultations shall begin on the day following receipt by the exporting Party of the notification of the request to initiate consultations. The period of prior consultations shall be 60 days, unless the Parties agree on a shorter period;
(g) the notification referred to in subparagraph f) shall be made through the competent authority and shall contain sufficient background information to support the application of paragraphs 4 and 5, including:
(h) the names and addresses of the domestic producers of identical, similar or directly competitive goods that are representative of the domestic industry, their share in the domestic production of that good and the reasons that lead them to claim that they are representative of that sector;
(iii) a clear and complete description of the good subject to the proceeding, the tariff subheading under which it is classified and the tariff treatment in force, as well as the description of the identical, similar or direct competitor good;